Tribunal Cuts Award to Taiwan on 1991 French Frigate Contract

Nov. 13, 2012 - 11:18AM
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PARIS — A legal tribunal Nov. 13 cut back to some 3 million euros ($3.8 million) a 45.5 million euro claim by Taiwan on the supply of spare parts for the 1991 Bravo contract for six Lafayette stealth frigates, a source familiar with the deal said.

Taiwan’s 45.5 million euro claim against DCNS, including legal costs, was based on a 15 percent reduction on the 1996 spares contract, worth about 150 million euros, plus interest, the source said. The contract forbade the payment of commissions to agents. If French interests paid agents, the 15 percent reduction became available, under the contract, the source said.

The arbitration tribunal, sitting under the aegis of the International Chamber of Commerce, ruled there was insufficient proof to support the full claim by Taiwan.

The legal win for DCNS follows a court judgment June 9 last year against Thales, which lost an appeal on the Taiwan frigates case. The 2011 legal defeat meant France and Thales had to pay 630 million euros to Taiwan, with French taxpayers paying 460 million and Thales 170 million euros.

The French government had guaranteed the $2.8 billion frigate deal signed in 1991, dubbed the Bravo contract, to the tune of 72.5 percent, as the shipbuilder was the then state-owned Direction de Constructions Navales. Thales supplied the electronics on the warships.